'One country, two systems' policy in HK

IV. Efforts Made by the Central Government to Ensure the Prosperity and Development of the HKSAR

The central government has always given high priority to Hong Kong's economic development and improvement of its people's livelihood, and fully supported it in meeting various difficulties and challenges. It gives full play to its role in adopting and executing the national development strategy, and actively promotes exchanges and cooperation between Hong Kong and the mainland, thus providing solid backing for Hong Kong's prosperity and stability. 1. Supporting the HKSAR in Defusing Risks and Meeting Challenges

Supporting Hong Kong in the fight against the Asian financial crisis. In 1997, the Asian financial crisis broke out, and spread rapidly around the region. Hong Kong was attacked by international speculative forces, its financial market was volatile, its dollar pegged exchange rate system came under attack, and its financial system faced a grave threat. Given these circumstances, the central government solemnly announced that it would safeguard the stability and prosperity of the HKSAR at all costs, strongly support the HKSAR government in protecting the pegged exchange rate system, and not depreciate the RMB. With this support from the central government, the HKSAR government took swift measures that ensured the stability of its financial system and the Hong Kong society.

Supporting Hong Kong in the fight against SARS. In the first half of 2003, the SARS epidemic hit Hong Kong. It not only posed a threat to the lives and health of the Hong Kong people, but also dealt a blow to Hong Kong's economy that had not recovered from the Asian financial crisis, resulting in deflation, market slump and a high unemployment rate of 8.7 percent. To ensure the safety of life of the Hong Kong people and help the Hong Kong economy climb out of recession, the central government promptly lent a helping hand. Although the mainland also needed medical supplies in the fight against SARS, the central government provided a large quantity of free medical supplies to Hong Kong. The Chinese leaders also went to the hardest-hit areas and hospitals of Hong Kong to inspect local conditions and console victims. On June 29, the mainland and Hong Kong signed the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), which outlines the steps that the mainland and Hong Kong should take in trade in goods and services, and trade and investment facilitation as well as the goals to be achieved. Later, the Individual Visit Scheme was introduced, allowing mainland residents to visit Hong Kong on their own. These measures helped Hong Kong overcome the SARS attack and boosted its economic growth.

Supporting Hong Kong in the fight against the international financial crisis. When the international financial crisis broke out in the second half of 2008, the central government was highly concerned about its impact on Hong Kong. In December of that year, it introduced 14 policies to ensure economic and financial stability in Hong Kong. In January 2009, the central government launched more policies, including the signing of a RMB200 billion currency swap agreement by the People's Bank of China with the Hong Kong Monetary Authority. Later, when visiting Hong Kong, the Chinese leaders announced a number of policies to support Hong Kong's economic development, improve the local people's livelihood, and strengthen its exchanges and cooperation with the mainland. All these policies played a positive role in boosting confidence, strengthening capability to defuse risks and stimulating the economic recovery of Hong Kong. (more)